Rising inflation expectations build pressure for Peru rate hike

LIMA, Sept 5 (Reuters) - Inflation expectations in Peru
continued to rise above the central bank's target ceiling in
August, a poll showed on Saturday, adding more pressure on the
monetary authority for an interest rate hike next week.

Inflation will likely end the year at 3.3 to 3.5 percent, up
from estimates of between 3.0 and 3.2 percent in July, according
to an August central bank poll of analysts, companies and banks.

The central bank aims to keep inflation between 1 and 3
percent, but the sol currency's rapid slide against the dollar
has helped keep it above the upper limit for the past five
months.

Prices in Peru's dollarized economy are sensitive to changes
in the exchange rate.

The central bank said last month it was considering raising
the benchmark interest rate in its next policy meeting on Sept.
10, just ahead of the Federal Reserve's decision on U.S.
interest rates that has fueled currency swings.

Central Bank President Julio Velarde said on Aug. 19 that
inflation expectations, growth data and the pace of rising
prices in August were key internal factors that would weigh on
his decision.

The annual inflation rate rose to 4 percent in August, the
first time it has been a full percentage point above the target
ceiling since 2012.

Economic growth data for July is scheduled for release on
Sept. 15. Preliminary data showed that mining activity, a big
driver of growth in Peru, rose 16.6 percent in July on surging
copper output.

The central bank poll forecast this year's economic
expansion at 2.8 to 3.0 percent, down from 2.9 to 3.0 percent
estimated in July's poll.

The central bank has said it believes that a recovery from a
sharp economic slowdown in Peru is now underway.
(Reporting by Mitra Taj; Editing by Mark Potter)